DIY super review won’t rock the boat

Senior figures in the self- managed superannuation fund industry are breathing a quiet, collective sigh of relief that
Jeremy Cooper
, who is heading a review of Australia’s $1.2 trillion superannuation sector, did not propose stringent regulation in a preliminary report published last week.

Cooper clearly believes the DIY sector, which oversees some $330 billion of assets, is working reasonably well. Indeed one of his chief concerns seems to be that it stays that way. In other words, Cooper does not want novices, with low balances and little investment experience, getting the idea that self- managed super is the way to automatic riches and lower fees.

All trustees of super funds should be behind him on this, lest the sector become unmanageable down the track, prompting the government to spoil the party for everyone.

The message is: if trustees act like adults, they will be treated as such. Cooper has resisted the temptation to limit the size of DIY funds or demand that trustees obtain investment or other qualifications.

He is happy for the Australian Taxation Office to continue regulating self-managed funds, but he has proposed the ATO introduce penalties so punishment can match the degree of a breach of super rules.

No doubt the recommendation to ban exotic investments such as paintings, wine, antiques and stamps will send some investors into a tailspin, given some DIY funds are set up purely to hold such assets, but the numbers will be relatively small.

The proposal to allow DIY funds to keep investing in business properties will be welcomed by many, even if, in an ideal world, Cooper would rather have done away with this too.

Perhaps the harshest treatment from Cooper will be meted out to the various service providers.